AB 392

Under current law, a lender other than a bank, savings bank, savings and loan

association, or credit union (financial institution) generally must obtain a license

from the Division of Banking in the Department of Financial Institutions (DFI) to

assess a finance charge for a consumer loan that is greater than 18 percent. This type

of lender is generally referred to as a "licensed lender." With certain limited

exceptions, current law provides no maximum finance charge for a consumer loan

made by a licensed lender.

The bill changes the licensing requirement so that it is based on the amount of

a loan, rather than the finance charge. Under the bill, a lender other than a financial

institution must obtain a license if the lender makes a consumer loan of $5,000 or

less.

The bill also prohibits a lender who is so licensed from assessing a finance

charge on a consumer loan that exceeds 36 percent per year. Under the bill, "finance

charge" has the same definition as under the Wisconsin Consumer Act, which is also

administered by DFI. The bill requires that DFI enforce the foregoing prohibition.

A person who violates the prohibition is subject to the same penalty that applies

under current law to a licensed lender who does not obtain a license, which is a fine

of not more than $500, imprisonment for not more than six months, or both. In

addition, the bill allows a borrower to bring an action against a lender who violates

the prohibition to recover damages in an amount equal to the greater of the following:

1) twice the amount of the finance charge in connection with the loan made to the

borrower; or 2) the actual damages, including incidental and consequential damages,

sustained by the borrower by reason of the violation. The bill also allows the

borrower to recover the costs of the action, including reasonable attorney fees.